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Key steps for real estate development

Government has moved to resolve a number of issues in the hope that it will attract property investors By Nikos Roussanoglou

The government has taken a series of legislative initiatives in recent weeks that hold the potential to spark a host of investment moves in the property market and the development of holiday resorts around Greece.

Market professionals say that the efforts being made on a legal and institutional level to finally put the country’s town-planning and zoning map in order while modernizing land usage to reflect reality constitute a very favorable environment for attracting both small- and large-scale investments in the real estate market.

After all, there was never an absence of investment interest in the market – perhaps with the exception of the last two to three years of the economic recession – and this is seen to be a domain with huge potential given Greece’s extensive coastline which remains largely unspoilt.

Now that the country’s economic climate has improved, introducing solutions to longstanding problems on a town-planning legislation level is a basic precondition for wooing foreign investments, as long as any legislative interventions are actually applied, as experience has shown a great number of such initiatives remained unimplemented. Market experts are now hoping that this will not be the case this time around as they see that the recently introduced regulations provide answers to a number of demands from the industry.

One of the most important steps concerns the attempt to amend the status of hotel resort complexes. The bill to be discussed by Parliament this summer amends regulations passed just 10 months ago regarding the creation of new resorts that can operate on a 12-month basis. It simplifies the process for the sale of tourism accommodation constructed within developments featuring luxurious hotels, golf courses, conference centers, marinas and so on. The draft law would further allow for the sale of these accommodation units before construction, as is the case in other major tourism markets.

Up until now investors could only put the accommodation units up for sale after having completed the whole complex and received the operating license – i.e. once they had completed the investment. That provision led to major reactions from potential investors who are making plans for such projects in areas such as Cassiope on the island of Corfu, as well as on Crete and Rhodes.

The new regulation would apparently allow for the sale or long-term lease of furnished tourism accommodation units straight after the issue of building permits and all other necessary documentation for the start of construction works concerning the hotel unit, the special tourism infrastructure as well as the furnished unit to be the object of the sale or lease. This way investors could utilize the accommodation units to draw funds for the financing of their investment, as is the norm in such projects.

That regulation, combined with an existing town-planning instrument for special development plans concerning strategic investments, allows private investors to have presidential decrees issued on zoning planning, land usage, siting and seaside land concession for strategic investments.

Besides the regulations on tourism accommodation, there has been another significant intervention in the reform of the zoning and town-planning legislation in Greece with the determination of clear usage of land, in the context of facilitating the development of housing and commercial/professional activities both in areas within town planning and outside it.

As a recent weekly report on financial developments by Alpha Bank stated, “the new legislation seeks to protect the environment efficiently in all sectors with absolutely transparent regulations that will be understood by everyone and can indeed be enforced and respected by everyone. It replaces the policy of protecting the environment via complex, non-transparent and inapplicable legal clauses that required excessively time-consuming procedures and were in many cases an insurmountable obstacle for healthy investment and professional activity and the country’s development, while providing the ideal framework for illegal construction and professional activity that until today has been the norm in Greece.”

Notably the country’s electronic database for illegal buildings has to date registered 41 million square meters of such constructions, of which 75 percent has been implemented within town planning, which is indicative of the extent of illegal construction activity.

Another key element of the new legislation is that it allows for installations for professional activities in areas that were to date exclusively used for housing purposes. This means that it will now become possible to open and operate restaurants, bakeries, hairdressers and bars in areas of a residential character, although the concession of licenses will be at the discretion of the local authorities.